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US eGrocery Sales Trends with Brick Meets Click – May 2024 Insights

May U.S. eGrocery Sales Reach $6.8 Billion, Down 0.4% From Last Year

The results from the latest Brick Meets Click/Mercatus Grocery Shopping Survey have just been released. Among several other important data points, it reveals that May 2024’s topline eGrocery sales reached $6.8 Billion.

This small decline from the $6.9 billion in eGrocery sales from May 2023 once again represents the stabilization of the online grocery market despite the impact of inflation and other economic concerns on consumer behavior.

In fact, the slight dip in sales comes despite a year-over-year gain in overall monthly active users (MAU) for eGrocery. While more households are buying groceries online, they’re not making purchases as frequently as they did a year ago.

This month’s report shows lower order frequencies across all receiving methods, resulting in:

  • Pickup sales for May 2024 decreasing by 3.9%, despite MAUs growing by nearly 3%.
  • Delivery sales holding steady YOY even though its MAU base expanded into the low teens.

Meanwhile, Ship-to-Home sales rose 9.0% despite fewer orders, with both MAUs and average order value (AOV) expanding significantly compared to May 2023.

As always, there’s more to the story than just the numbers.

Keep reading below for analysis into these and other data points from this month’s report. You’ll also find key takeaways and actionable advice to help you turn the latest data into better decision making for your grocery business.

May 2024 US Online Grocery Sales Analysis

May 2024 US Online Grocery Sales

If More People Are Buying Groceries Online, Why Did Sales Decrease?

Despite the overall eGrocery user base growing by more than 3% YOY, there was still a 0.4% decrease in online sales in May.
As we mentioned in the introduction, lower order frequencies across eGrocery receiving methods shows that while more people might have been buying groceries online, individual households weren’t making the multiple purchases they were a year ago.

Further analysis from Brick Meets Click reveals that the total number of households buying groceries online grew only 15 bps during the month. In contrast to the large increase in MAUs, this smaller rise suggests that the MAU growth was driven largely by lapsed users buying online again last month as opposed to customers trying eGrocery for the first time.

The data also reveals that the expanded MAU base was powered by strong gains in Amazon’s pure-play services and Mass Retailers, while the Supermarket format’s online customer base decreased from where it was a year ago.

What’s Behind Delivery’s MAU Increase?

We get a clearer picture on the rise of the MAU base for Mass Retailers when we connect it to the large increase in MAUs for Delivery as an eGrocery receiving method.

More customers are choosing Delivery as a result of Walmart’s push to attract new members to its Walmart+ program which typically offers free, unlimited grocery delivery as its primary perk. This, combined with Instacart’s continued push for its own annual membership, is boosting delivery MAUs through the roof.

In creating a connection between value (free, unlimited) and convenience (delivery to your door), Walmart is finding yet another way to appeal to current consumer demands and expand its market share.

Almost a Third of Supermarket Customers are Cross-Shopping

We also see evidence of this growing appeal in the cross-shopping figures from this month’s report:

Three in 10 customers bought online from both Grocery and Mass Retailers during the past month. The cross-shopping rate between Grocery and Walmart specifically also grew YOY, reaching nearly 20% for May 2024.

Grocers vs. Mass Merchants

In terms of where U.S. households buy most of their groceries, Mass Retailers increased their penetration YOY to finish the month at 39.7% of the total market. Despite losing 90 bps points since May of last year, Supermarkets maintained top spot — 41.1% — as the primary format for groceries.

While on top for now, Supermarkets need to beware of repeat intent rates from this month.
The likelihood that a customer will complete another online order next month with the same eGrocery service used most recently fell over two percentage points to 57.8%. This decline was most noticeable among the 30 – 44 age demographic — which are typically eGrocery super customers.

The Grocery format drove this overall decline as it dropped five percentage points. Meanwhile, the repeat intent rate for Mass Retailers remained essentially unchanged between May 2023 and May 2024.

Key Takeaways from May 2024 eGrocery Sales:

  • The U.S. eGrocery market reached $6.8 billion in May 2024, representing a 0.4% year-over-year decline.
  • Pickup sales decreased by 3.9%, impacted by lower order frequency and AOV.
  • Delivery sales remained steady with a 0.2% increase, supported by a large increase in MAUs (due to strong promotional activities) and a modest rise in AOV.
  • Ship-to-Home sales increased by 9.0%, driven by significant gains in AOV and an expanding MAU base.
  • The overall eGrocery MAU base rose more than 3% year-over-year, indicating increased engagement from lapsed users.
  • Cross-shopping between Grocery and Mass Retailers increased, with 31.5% of Grocery customers also shopping with Mass Retailers like Walmart.
  • Repeat intent rates fell to 57.8%, driven by a drop among the 30 – 44 age group, the heaviest users of these services impacting the Supermarket segment specifically.
  • Despite losing 90 basis points since May of last year, Supermarkets remain the primary format for purchasing groceries, still slightly ahead of Mass Retailers.

 

Strategic Recommendations

Reach Consumers Where They Are

This month’s numbers reveal how Mass Retailers like Walmart have not only attracted customers with their ability to offer lower prices on products, but extended their pricing advantage to include delivery services.

By including free delivery as a perk of their membership plan, Walmart hopes to retain the customers it initially attracted with its less expensive products. But their tactic for doing so once again boils down to combining value and convenience in a single offering.

Grocers may not be able to compete on per-product price points or offer free service as part of its first-party delivery program. However, they can combine value and convenience to reach customers where they are with the right offer at the right time. Instead of merely extending generic digital coupons, grocers need to focus on more targeted, personalized, contextual offers based on past purchases, shopper profiles, preferences, and search behavior to better engage and retain customers.

After all, returning customers spend significantly more and order more frequently than first-time users.

That means utilizing technology to offer contextualized commerce and provide the type of personalized shopping experience that provides value (through targeted savings) and convenience (through timing offers of targeted savings to the customer’s purchase cycle).

Target Lapsed Customers Through Personalization

Analysis of the data from this month’s report indicates that the increase in MAUs was largely driven by lapsed users returning to online grocery shopping. This shows how lapsed customers are willing to give eGrocery another go — if the incentives are right.

Once again, technology can be utilized to entice them back through automated campaigns. By collecting and utilizing their first-party data, grocers can deploy specific engagement strategies and individualized offers based on key customer behaviors and segments — including lapsed — to efficiently deliver personalization at scale.

While this month’s sales figures dipped slightly despite the MAU increase, the deep personalization we’re describing above can encourage repeat purchases by timing messages to align with customer behavior and purchase cycles.

Communicate and Provide Real Value

With the Federal Reserve holding steady on interest rates, there is continued financial pressure on lower-income households — who represent a significant portion of online grocery shoppers.

Grocers need to show how they help customers save money, especially for lower-income households that are more sensitive to price changes. Variable fees based on delivery speed and highlighting savings at checkout are potential strategies.

Streamline Every Aspect of the Customer Experience

One of the more concerning data points from this month’s Brick Meets Click/Mercatus Grocery Shopping Survey is the decrease in repeat intent rate driven largely by customers of the Grocery format. The likelihood that a customer will complete another online order next month with the same eGrocery service they used this past month fell by more than two percentage points to 57.8%.

To address this issue, grocers need to take greater control of the customer experience, reduce friction points and make the shopping process as smooth, seamless, and convenient as possible.

This can be achieved by optimizing website and app interfaces to ensure easy navigation, providing quick access to frequently purchased items, and moving customers through a simplified checkout process. Enhancing the efficiency of order fulfillment, including faster and more reliable Pickup and Delivery options, will also contribute to a more positive customer experience.

Additionally, implementing a feedback loop to gather insights directly from customers about their shopping experiences can also help grocers identify pain points and address areas for improvement. By continuously refining the customer journey based on these insights, grocers can enhance customer satisfaction, drive repeat purchases, and ultimately increase long-term loyalty.

Closing Thoughts

That final recommendation really encapsulates the overarching theme of this month’s report.

Despite the stabilization of the online grocery market, the slight decline in sales this month and the drop in repeat intent rates highlight the need for grocers to focus on streamlining every aspect of the customer journey and enhancing the overall experience of their shoppers.

Grocers may not be able to match the value of lower prices or convenience of free delivery that Walmart is using to attract and retain customers. But retailers can use customer data to contextualize shopping experiences through targeted savings that are timed to purchase cycles. This personal approach ties nicely into the high-touch, high level of customer service that local grocers have traditionally relied on to keep customers satisfied.

Thank you for reading.

For more details on the Brick Meets Click/Mercatus May 2024 Grocery Shopping Survey, read the complete press release here. And stay tuned for next month’s analysis.

Speakers

Mark Fairhurst Headshot

Mark Fairhurst

Chief Growth Officer, Mercatus

David Bishop

David Bishop

Partner, Brick Meets Click